Daythree Digital Bhd (DAY3-Stock code 0281) will be making its debut on Bursa ACE Market today. The company is involved in Global business services (GBS) focusing on customer experience (CX) lifecycle management services enabled by in-house developed digital tools. The Ministry of Communications and Multimedia is committed to providing enterprise support in GBS infrastructure as well as a multitude of other initiatives. We expect DAY3 to register net earnings of RM9.5m and RM10.9m for FY23 and F24 respectively. BUY with a TP of RM0.36 based on 16x PER FY24EPS (30% discount to Bursa Malaysia Technology Index CY24 forward PER of 23x given its smaller market capitalisation).

GBS is the evolution between a shared services model and service outsourcing model. The shared services model and service outsourcing model primarily on handling conventional transactional tasks like payroll and accounting, enhancing process efficiency and cutting costs. DAY3’s clients are mainly in the Energy & Utilities and Telco & media industries. Apart from traditional functions, GBS is capable of delivering high-value functions such as consulting and business analytics, which contribute significantly to generate value for the organization.

The Ministry of Communications and Multimedia is dedicated to offering comprehensive support for GBS infrastructure and various other initiatives. The presence of a strong digital ecosystem, complemented by a diverse range of ICT services, has created the local ICT industry as one of the most resilient sectors in the country.

According to the Information and Communication Technology Satellite Account 2021 published by the Department of Statistics Malaysia, the Malaysian ICT industry grew 7.8% to register a value of RM217.1bn in 2021 or a 3.2% growth from the previous year (2020: RM201.4bn). Growth in the industry was attributed to the ICT manufacturing industry and ICT services industry which grew 11.1% and 7.0% respectively. ICT trade recorded growth of 6.6% while content and media recorded a slight decline of 2.0%.

To expand its business, DAY3 is planning to recruit additional 380 CX executives to enhance capacity to service the growing number of contracts. In addition, the company will spend RM3m from the IPO proceeds to purchase networking infrastructure, hardware & software to support its business requirements. DAY3 will increase its office space by leasing new CX delivery offices at UOA Business Park.

Balance sheet is strong with net cash of RM9.9m as at 2QFY23. Proceeds from the IPO will be used for business expansions and listing expenses. DAY3 does not have any formal dividend policy, however, the company intends to pay dividends to shareholders in the future.

Source: Rakuten Research - 26 Jul 2023

To sign up for an account : http://bit.ly/40BNqKI

[Youtube Tutorial] Account Opening & Enable Foreign Equity:http://bit.ly/3I5Jzxo